Investors often comment that we sometimes differ with the mainstream view on which stocks make good investments. That’s especially true with drug stocks.

The general view on these stocks seems to be that they are can’t-miss investments because the baby boomers are reaching an age when they will need drugs for a number of medical conditions, and are willing to …read more »

It pays to be skeptical of growth stocks that rely too heavily on acquisitions.

That’s because the buyer of something rarely knows as much about it as the seller. So it follows that if a company makes enough acquisitions, it might eventually buy something that has hidden problems. At some point, those problems will come out into the open and hurt …read more »

DOREL INDUSTRIES $36.35 (Toronto symbol DII.B; SI Rating: Extra Risk) (514-731-0000; www.dorel.com;Shares outstanding: 32.9 million; Market cap: $1.2 billion; Dividend yield: 1.4%) makes a wide range of products, including bicycles, ready-to-assemble home and office furniture; juvenile products, such as car seats, strollers, high chairs, toddler beds and cribs (including Eddie Bauer and Disney Baby licensed products); home furnishings, including chairs, …read more »

The Canadian consumer sector is highly competitive. Aside from other domestic retailers, Canadian consumer stocks are facing increasing competition from large U.S. discount retailers, like Wal-Mart and Costco.

As the competition between retailers continues to heat up, it’s more important than ever for investors to focus on Canadian consumer growth stocks with a proven ability to adapt and prosper in the …read more »

CANADIAN TIRE CORP. $56 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 81.6 million; Market cap: $4.6 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.5%; SI Rating: Above Average) sells automotive, household and sporting goods through 479 stores. These account for roughly 65% of its revenue, and 55% of its earnings. Canadian Tire owns 70% of its stores, but …read more »

Canadian Tire is an example of what you might call a cyclical growth stock. It’s cyclical because its sales generally rise and fall with the economy. But it also has a growth element. Thanks to an aggressive store-renovation plan, its overall sales rose 70% in the past 10 years, even though it operates just 10% more stores. It has also …read more »

ARBOR MEMORIAL SERVICES INC. $25 (Toronto symbol ABO.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 10.6 million; Market cap: $265.0 million; Price-to-sales ratio: 1.0; Dividend yield: 1.8%; SI Rating: Average) owns 41 cemeteries, 26 crematoria, five reception centres and 82 funeral homes in eight provinces.

In Arbor’s first quarter, which ended January 24, 2010, its earnings rose 12.8%, to $5.3 million, …read more »

BOMBARDIER INC. (Toronto symbols BBD.A
$5.40 and BBD.B $5.39, Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $9.2 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.9%; SI Rating: Extra Risk) is the world’s third-largest commercial-aircraft maker, behind Boeing and Airbus. Its aerospace division supplies roughly half of its revenue. The other half comes from its transportation division, …read more »

PETSMART INC. $32 (Nasdaq symbol PETM; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 123.6 million; Market cap: $4.0 billion; Price-to-sales ratio: 0.7; Dividend yield: 1.3%; WSSF Rating: Above Average) is the biggest pet supply chain in the U.S. It operates 1,149 pet stores in the U.S. and Canada. It also has 162 in-store PetHotels, which look after pets while their …read more »

The retailing industry is fiercely competitive. But leading retailers like Wal-Mart and PetSmart have special advantages that give them an edge.

For example, Wal-Mart’s huge size lets it extract low prices from suppliers all over the world.

PetSmart is much smaller that Wal-Mart, so it doesn’t have the same sway over its suppliers. However, PetSmart’s focus on high-quality products and specialized services …read more »

Non-bank financial companies, such as mutual-fund and insurance firms, are good ways to diversify your Finance-sector holdings. The six we analyze below are leaders in their niche markets. That cuts their risk. As well, their well-known brands will help them grow as the global economy continues to recover. We have a high opinion of all six companies, but only two …read more »

DEL MONTE FOODS CO. $15 (New York symbol DLM; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 198.6 million; Market cap: $3.0 billion; Price-to-sales ratio: 0.7; Dividend yield: 1.1%; WSSF Rating: Average) makes canned fruit, vegetables, sauces and soups. It also makes pet food.

In its third quarter, which ended January 31, 2010, earnings fell 4.0%, to $57.2 million from $59.6 million …read more »

DIAGEO PLC ADRs $66 (New York symbol DEO; Conservative Growth Portfolio, Consumer sector; ADRs outstanding: 626.2 million; Market cap: $41.3 billion; Price-to-sales ratio: 2.9; Dividend yield: 3.6%; WSSF Rating: Above Average) is the world’s largest premium alcoholic beverage company. Spirits account for 73% of Diageo’s sales, followed by beer (22%) and wine (5%). Each American Depositary Receipt represents four Diageo …read more »

THE BOEING CO. $72 (New York symbol BA; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 757.0 million; Market cap: $54.5 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.3%; WSSF Rating: Above Average) will increase production of its 777 passenger jet to seven planes a month from five in mid-2011. In mid-2012, it will boost production of its 747 airliner …read more »

On Sunday, the U.S. House of Representatives passed the Obama administration’s massive overhaul of the U.S. health-care system, nicknamed Obamacare. On Tuesday, the president signed the bill into law.

The non-partisan Congressional Budget Office puts the cost of Obamacare at about $940 billion over ten years. The administration plans to cover this cost with a new tax on high-income earners, Medicare …read more »

WESTJET AIRLINES $13.49 (Toronto symbol WJA; SI Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 138.8 million; Market cap: $1.9 billion; No dividends paid) fell 3% on news that Sean Durfy will resign as the company’s chief executive officer. His replacement is Gregg Saretsky, WestJet’s executive vice-president of operations.

Sudden resignations like this always add to a stock’s uncertainty. However, the new …read more »

INTERNATIONAL ROAD DYNAMICS $0.92 (Toronto symbol IRD; SI Rating: Speculative) (306-653-6600; www.ird.ca; Shares outstanding: 14 million; Market cap: $12.9 million; No dividends paid) jumped more than 50% in mid-March after it reported quarterly results that were higher than a year ago.

In the three months ended November 30, 2009, International Road’s revenue rose 3.9%, to $12.8 million from $12.3 million a …read more »

LEON’S FURNITURE LTD. $12.20 (Toronto symbol LNF; SI Rating: Average) (416-243-7880; www.leons.ca; Shares outstanding: 70.8 million; Market cap: $863.8 million; Dividend yield: 2.3%) has built its chain of over 66 furniture stores on its four main strengths: a huge selection of furniture, appliances and electronics; a lowest-price guarantee; strong after-sales service; and aggressive TV, radio and print advertising.

In the three …read more »

TIM HORTONS $33.66 (Toronto symbol THI; SI Rating: Average) (905-845-6511; www.timhortons.com; Shares outstanding: 179.2 million; Market cap: $6.0 billion; Dividend yield: 1.5%) earned $296.4 million in 2009. That’s up 4.1% from $284.7 million in 2008. Earnings per share rose 5.8%, to $1.64 from $1.55, on fewer shares outstanding.

The company’s 2009 sales rose 9.7%, to $2.2 billion from $2.0 billion. That’s …read more »

FAIRFAX FINANCIAL HOLDINGS $373.55 (Toronto symbol FFH: SI Rating: Average) (416-367-2612; www.fairfax.ca; Shares outstanding: 19.4 million; Market cap: $7.2 billion; Dividend yield: 2.7%) plans to buy the 91.7% of Zenith National Insurance Corp. (New York symbol ZNT) that it doesn’t already own for $1.4 billion U.S. To help pay for the purchase, Fairfax has raised $200 million U.S. by issuing …read more »

We’ve long admired TransCanada Corp. for its high-quality operations and the predictable cash flows they generate.

The company is now building several new pipelines and power plants to spur its growth. The $22 billion cost of these projects nearly equals TransCanada’s market cap (the value of all its outstanding shares). But they should pay off for decades to come.

TRANSCANADA CORP. $36 …read more »

CAE INC. $9.53 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 256.3 million; Market cap: $2.4 billion; Price-to-sales ratio: 1.5; Dividend yield: 1.3%; SI Rating: Average) continues to expand its medical-simulator operations. It recently teamed up with Ornge, which operates Ontario’s air-ambulance system. CAE will use its simulators and classroom instruction to train Ornge’s paramedics to …read more »

TIM HORTONS INC. $33 (Toronto symbol THI; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 176.2 million; Market cap: $5.8 billion; Price-to-sales ratio: 4.5; Dividend yield: 1.6%; SI Rating: Average) will open 900 new coffee-and-donut shops over the next three years: 600 in Canada and 300 in the U.S. Right now, it has 3,015 outlets in Canada and 563 in the …read more »

TORSTAR CORP. $7.77 (Toronto symbol TS.B; Shares outstanding: 78.9 million; Market cap: $613.1 million; SI Rating: Above Average; Dividend yield: 4.8%) rose a total of 24.3% in two days in the first week of March after it reported greatly improved results.

In 2009, Torstar earned $35.6 million, or $0.45 a share. That’s a big improvement over the $158.7 million, or $2.01 …read more »

Now that the Olympic flame is out in Vancouver, the attention of the sporting world is starting to turn to the next winter games, in Sochi, Russia, in 2014.

That’s also true of the investing world, as companies line up to get a piece of the roughly $12 billion (Canadian) that is being spent to build the Russian Olympics in Sochi. …read more »

YUM! BRANDS INC. $34 (New York symbol YUM; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 469.3 million; Market cap: $16.0 billion; Price-to-sales ratio: 1.5; Dividend yield: 2.5%; WSSF Rating: Average) operates over 37,000 restaurants in more than 110 countries. It has five main banners: KFC (fried chicken), Pizza Hut, Taco Bell (Mexican food), A&W (hamburgers) and Long John Silver’s (seafood).

Yum’s …read more »

MCDONALD’S CORP. $65 (New York symbol MCD; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.1 billion; Market cap: $71.5 billion; Price-to-sales ratio: 3.1; Dividend yield: 3.4%; WSSF Rating: Above Average) is the world’s largest fast-food company by sales. It has around 32,500 restaurants in over 120 countries.

Rising prosperity in developing countries is making McDonald’s food more affordable to more consumers. …read more »

Opening a restaurant is one of the riskiest business decisions you can make. It leaves you at the mercy of local weather, neighbourhood deterioration, temperamental cooks, low-paid cleaners and servers, plus the constant threat of new competitors. No wonder restaurants have the highest failure rate of all new businesses.

However, restaurant chains are an entirely different matter. Successful chains have overcome …read more »

Department store operators Nordstrom, Macy’s and J.C. Penney have cut costs and slowed their expansion plans during the recession. Lower costs, plus their strong reputations and popular brands, should spur their earnings as the economy recovers.

NORDSTROM INC. $37 (New York symbol JWN; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 217.5 million; Market cap: $8.0 billion; Price-to-sales ratio: 0.9; Dividend yield: …read more »

CAMPBELL SOUP CO. $33 (New York symbol CPB; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 342.9 million; Market cap: $11.3 billion; Price-to-sales ratio: 1.5; Dividend yield: 3.3%; WSSF Rating: Above Average) expects sales to rise by 2.5% to 3.5% in its current fiscal year, which ends July 31, 2010. That’s less than its earlier prediction of 4% to 5% growth.

The …read more »

IDEXX LABORATORIES INC. $53 (Nasdaq symbol IDXX; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 58.6 million; Market cap: $3.1 billion; Price-to-sales ratio: 3.0; No dividends paid; WSSF Rating: Average) makes equipment that veterinarians use to detect diseases in animals. It also makes systems that detect contaminants in water and milk. The company sells its products in over 100 …read more »

The U.S. restaurant industry has faced tough challenges over the past 18 months. That’s because the economic downturn has prompted more consumers to eat at home, or to spend less when they dine out.

The best U.S. restaurants have done a good job of cutting costs during the slowdown. Some have improved their menus by introducing new items and focusing on …read more »

REITMANS (CANADA) LTD. $16.28 (Toronto symbol RET.A; SI Rating: Extra Risk) (514-384-1140; www.reitmans.com; Shares outstanding: 68 million; Market cap: $1.1 billion; Dividend yield: 4.4%) owns 984 women’s clothing stores across Canada.

The chain consists of 372 Reitmans, 167 Smart Set, 163 Penningtons, 123 Addition Elle, 76 Thyme Maternity, 66 RW & Co. and 17 Cassis stores. Reitmans continues to monitor its …read more »

FAIRFAX FINANCIAL HOLDINGS $367.70 (Toronto symbol FFH: SI Rating: Average) (416-367-2612; www.fairfax.ca; Shares outstanding: 19.4 million; Market cap: $7.1 billion; Dividend yield: 2.7%) is a financial-services holding company with $29.8 billion of assets. Aside from managing investments, Fairfax sells insurance and reinsurance. Prem Watsa is the company’s chairman and founder. Fairfax trades at a high price, but you can buy …read more »

CHIPOTLE MEXICAN GRILL $104.46 (New York symbol CMG; SI Rating: Speculative) (303-595-4000; www.chipotle.com; Shares outstanding: 31.5 million; Market cap: $3.3 billion; No dividends paid) is a Denver-based Mexican-restaurant chain.

Founded in 1993, Chipotle (pronounced chi-POATlay) charges slightly higher prices than fast-food chains, but offers higher-quality food, including naturally raised meat, and better decor and service.

Chipotle has 956 restaurants, including its first …read more »

Canada’s big telephone companies have faced strong competition from cable companies for years. This experience will help them deal with three new entrants in the wireless field. One of these new competitors, Wind Mobile, is already operating. Two more, Mobilicity and Public Mobile, should launch later this year.

Meanwhile, all four major phone companies are using their steady cash flows to …read more »

CANADIAN NATIONAL RAILWAY CO. $54 (Toronto symbol CNR; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 471.0 million; Market cap: $25.4 billion; Price-to-sales ratio: 3.3; Dividend yield: 2.0%; SI Rating: Above Average) is spending $100 million to build a new rail hub in Calgary. To put this figure in context, CN earned $1.5 billion, or $3.24 a share, in …read more »

A subscriber to Stock Pickers Digest, our newsletter for aggressive investing, recently asked us how much importance we give to a company’s name when we’re selecting growth stock picks to recommend in our newsletters and investment services. He felt that a poorly thought-out company name may reflect a poorly thought-out business plan and a low chance of success.

He specifically …read more »

ALCOA INC. $13 (New York symbol AA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 974.4 million; Market cap: $12.7 billion; Price-to-sales ratio: 0.7; Dividend yield: 0.9%; WSSF Rating: Average) will invest $900 million in a joint venture it has formed with Saudi mining firm Ma’aden to build an aluminum plant in Saudi Arabia. To put this figure in context, Alcoa …read more »

INVACARE CORP. $25 (New York symbol IVC; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 32.3 million; Market cap: $807.5 million; Price-to-sales ratio: 0.5; Dividend yield: 0.2%; WSSF Rating: Average) makes wheelchairs, motorized scooters and other mobility and home-care products.

The company may have to pay $12 million to $14 million a year in new taxes. That’s because the U.S. Senate recently …read more »

WESTJET AIRLINES $13.45 (Toronto symbol WJA; SI Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 138.8 million; Market cap: $1.9 billion; No dividends paid) has invested heavily in new planes and a state-of-the-art computer reservation system. But unlike most airlines, it has done so without taking on too much debt. That, plus its stellar reputation for customer service, makes it our …read more »

TOROMONT INDUSTRIES LTD. $27.51 (Toronto symbol TIH; SI Rating: Extra Risk) (416-667-5511; www.toromont.com; Shares outstanding: 64.9 million; Market cap: $1.8 billion; Dividend yield: 2.2%) has raised its takeover offer for Enerflex Systems Income Fund (Toronto symbol EFX.UN) to $613 million. Enerflex has agreed to the new terms.

Enerflex unitholders will now receive a combination of cash and Toromont shares equal to …read more »

INTUITIVE SURGICAL $308.99 (Nasdaq symbol ISRG; SI Rating: Average) (515-507-5000; www.intuitivesurgical.com; Shares outstanding: 38.2 million; Market cap: $11.8 billion; No dividends paid) makes the “da Vinci,” a computerized surgical system. Intuitive’s shares trade at a high price, but you can buy as few as 10 through any broker.

Guided by a miniature camera connected to a 3-D monitor, surgeons use the …read more »

MANITOBA TELECOM SERVICES INC. $35 (Toronto symbol MBT; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 64.7 million; Market cap: $2.3 billion; Price-to-sales ratio: 1.2; Dividend yield: 7.4%; SI Rating: Average) has raised $200 million by selling new 10-year bonds that yield 5.625%.

This cash will help the company fund a new high-speed wireless network that it is building in Manitoba in …read more »

Growth stocks are companies whose earnings growth is expected to be above the market average. These firms often pay little or no dividends. Instead, they invest any extra money in furthering their growth.

These stocks are long-term investments. They can be well-known stars or quiet gems, but they share the common trait of growing at a higher than average rate within …read more »

ENCANA CORP $36.15 (Toronto symbol ECA; Shares outstanding: 750.3 million; Market cap: $27.1 billion; SI Rating: Average; Dividend yield: 2.2%) focuses on unconventional natural gas. Its shares have moved up lately, along with higher gas prices spurred on by cold weather.

CENOVUS ENERGY $27 (Toronto symbol CVE; Shares outstanding: 751.3 million; Market cap: $20.3 billion; SI Rating: Extra Risk; Dividend yield: …read more »

THE STANLEY WORKS $52 (New York symbol SWK, Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 80.4 million; Market cap: $4.2 billion; Price-to-sales ratio: 1.1; Dividend yield: 2.5%; WSSF Rating: Average) makes a wide variety of hand and power tools for consumer and industrial users. Top brands include Stanley, FatMax and Powerlock.

Stanley has agreed to buy rival toolmaker Black …read more »

Diebold began making locks, safes and vaults for banks in 1876. NCR started making mechanical cash registers in 1879. In the years since, both companies have evolved into the world’s top suppliers of automated teller machines (ATMs).

Diebold continues to focus on the banking industry, mostly with specialized services. In contrast, NCR has cut its exposure to banks with a variety …read more »

Small caps are companies with a “market cap”(the value of shares they have outstanding) below $2 billion, or some other arbitrary figure. Small-cap stocks are generally more volatile than large-cap stocks. Temporary setbacks, such as a poor quarterly earnings report or the loss of a contract, can quickly cut their share prices.

To cut your risk, you should focus on small …read more »

YUM! BRANDS INC. $35 (Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 467.7 million; Market cap: $16.4 billion; Price-to-sales ratio: 1.6; Dividend yield: 2.4%; WSSF Rating: Average) announced that its 2009 earnings per share should rise by 12%. That’s because strong growth at its fast-food outlets in China and other countries is offsetting slow sales in the U.S. Lower food costs …read more »